Russian Food Embargo

AG BM 102

Background

• August 7: Russia, in response to the economic sanctions imposed by the European Union and the United States, imposed an embargo on those countries imposing sanctions on them

• Includes meat and poultry, fish, dairy products, fruit and vegetables

Russian poultry embargo

• February 2002• Response to our steel tariffs• Affected beef and pork markets as well

Background

• 8% of poultry production goes to Russia• Imports are 60% of Russian poultry

consumption• In 2001, 1 million Metric tons to Russia• $630 million• 57% of Leg Quarter (Bush legs) exports

Broiler Exports

Country 1999 2000 2001

RTC (mil lbs)

Japan 218 229 236

Mexico 299 351 381

Hong Kong 1,227 918 750

Singapore 23 54 49

Canada 146 169 177

Russia 694 1,262 2,304

Latvia 691 308 98

Others 1,600 1,626 1,569

Total 4,898 4,918 5,562

2001 Russia bought 42% of poultry exports

Broiler Exports to Russia (Mil pounds)

Month 2001 2002

Jan 226 225

Feb 131 194

Mar 133 105

Apr 178 14

May 191 60

Jun 228 168

Jul 196 140

Cost of the Embargo

• March - $100 mil. to poultry industry• April $200 mil. to poultry industry• Also affected beef and pork• Barrows and gilts 35.3 cents., down from 45.8

previous year• Steers 65.6 cents. down from 72.7 previous

year

What will this mean to our Agricultural prices?

• Russia now buys about7% of poultry exports• In 2002 our meat market was hit hard• This time, they will buy poultry from Brazil and

we will serve Brazil’s customers they will leave unserved

• Russia buys 1% of total ag exports

What does it mean to Russian people

• 40% of the food comes from imports • Food prices will rise• Some shortages• Already a very poor country• Saratov• Russian officials said the embargo would drive

the revival of domestic agriculture and promote the Kremlin’s goal for the country to become self-sufficient in food production.

• Moscow officials say frozen fish prices in the capital's major supermarkets have risen by 6%, milk by 5.3% and an average cheese costs 4.4% more than it did before the 7 August ban took effect.

Summary

• Big effect on Russian consumers• Big effect on some European farmers• Little effect on us farm prices